Teradata's (TDC) business made "underlying progress" in Q1, with better-than-expected results, Morgan Stanley said in a note late Tuesday.

The company reported Q1 adjusted earnings Tuesday of $0.66 per diluted share, up from $0.57 a year earlier, while revenue fell to $418 million from $465 million.

"Market volatility around March quarter-end was the biggest risk coming into earnings tonight, however TDC's [Q1] results were generally better than feared," Morgan Stanley said, noting that the company saw improved retention rates, no deal slippage, and Cloud annual recurring revenue growth during the quarter.

According to the investment firm, the company is looking at a "make-or-break" H2 as it reiterated most of its 2025 guidance metrics but estimated Q2 earnings per share of $0.39 at the midpoint. This implies that 53% of the year's EPS will come in during H2, said Morgan Stanley.

Morgan Stanley raised its price target on Teradata's stock to $28 from $26, with an overweight rating.

Price: 22.48, Change: +0.53, Percent Change: +2.39